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Christmas may now be past, but holiday credit card bills can haunt you well into the new year.
Maybe you spent more than you planned on a last-minute gift or sprang for dinner for unexpected holiday guests. Decembers tend to bust the best of budgets.
Let’s say you charged $500 in gifts and food over the holidays on a credit card with an 18 percent interest rate and a minimum monthly payment of $20. If you pay only the minimum due each month, it will take you 32 months — and cost you $131 in interest — to be rid of your holiday debt.
You can plug your own numbers into an online credit card repayment calculator. Then try these post-holiday hacks to pay down debt and replenish savings:
1. Tackle balances wisely
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Traditionally, financial advisers have told consumers to pay off their highest-interest debts first, as their cost adds up the fastest. But studies have found advantages to the snowball approach, which involves paying off the smallest debts first.
To determine which approach is better for you, check out “The Best Way to Kill Off Your Credit Card Debt.”
2. Transfer a balance
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Shifting your balance to a credit card that offers zero percent interest on balance transfers might buy you some breathing room. To learn more about them, check out “3 Credit Cards With Zero Percent Interest Rates — and Why They’re a Big Deal.”
For help finding the right no-interest card for you, check out the credit card search tool in Money Talks News’ Solutions Center. For example, select “0% APR” or “Balance Transfer” from the menus on the left to view various cards with those features.
3. Turn gift cards into cash
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4. Return gifts
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You won’t be alone if you return a dud gift.
If you have the receipt or a gift receipt, bring it back to the store for cash. Even if you don’t have a receipt, try to return it. You might get store credit.
If possible, make sure the item is in its original packaging, and keep tags on clothing and shoes. For more pointers, check out “12 Tips for Returning Gifts as Gracefully as Possible.”
You also can post what you don’t want online, such as on eBay, Craigslist or neighborhood Facebook groups.
5. Shop your pantry
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Got holiday leftovers? Get creative with what you’ve got on hand. Only shop for what you need fresh, like milk and produce.
Avoid last-minute fast-food outings, take lunch to work and do without a cappuccino.
6. Track your money
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Use the free tools provided by Money Talks News partner Personal Capital or a similar app that allows you to view all of your accounts — including checking, savings and retirement accounts — in one place.
Such apps generally let you track your spending and even your net worth.
Knowing exactly where all your money is going each month can help you find more funds to put toward paying off your debt. And tracking your net worth can help you build your savings.
7. Pay yourself first
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Once you’ve paid off your debt, prioritize building an emergency fund. Having money set aside for unexpected expenses is key to avoiding the need to take on debt in the future.
Perhaps the best way to build up any type of savings is to pay yourself first, such as through payroll deduction. With this approach, you have money automatically taken from your paycheck and transferred to a savings or retirement account.
Your employer may even allow you to directly deposit paychecks into multiple accounts.
Also, send any additional income from raises, bonuses, cash awards or other windfalls straight to savings.
How do you handle holiday debt? Share with us in comments or on our Facebook page.
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